Wall Street Meets Crypto: FDIC Opens the Door for Banks to Enter the Market

Now under acting chairman Travis Hill, appointed by President Donald Trump, the FDIC is reviewing its stance on crypto. This initiative could transform the dynamic between traditional banking and the rapidly expanding cryptocurrency market.

As a first step in its crypto policy update, the FDIC has declassified 175 documents related to the regulatory oversight of banks involved (or attempting to get involved) in cryptocurrency and blockchain initiatives.

I have been critical in the past of the FDIC’s approach to crypto assets and blockchain. As I said last March, the FDIC’s approach ‘has contributed to a general perception that the agency was closed for business if institutions are interested in anything related to blockchain or distributed ledger technology,

said acting chairman Travis Hill in an official FDIC press release.

Hill’s remarks underscore frustration with the agency’s previous policies, which, he argues, created the impression that institutional players were blocked from engaging with emerging financial technologies.

The FDIC’s previous strategy involved issuing “pause letters”, official notices advising banks to suspend or refrain from expanding their crypto-related operations.

Related: Judge Told FDIC to Review Their Redactions of Crypto Letters

This approach contributed to the “debanking” of the crypto industry. Now, the FDIC is shifting direction, announcing a comprehensive review of its regulatory communications with banks that have shown interest in offering crypto-related services.

According to Hill, this review is intended not only to enhance transparency but also to establish a clear regulatory pathway for institutions looking to engage in crypto and blockchain activities while ensuring financial stability and security. The FDIC plans to replace the outdated Financial Institution Letter (FIL) 16-2022, a move that will be central to its new digital asset regulatory framework.

Related: Peirce Maps Out a Regulatory Road Trip for Crypto

The debanking of crypto companies and the deliberate suppression of banks attempting to integrate cryptocurrency services have become a major concern not only for regulators but also for lawmakers.

During a Senate Banking Committee hearing, multiple instances of regulatory pressure on banks were exposed. One of the most striking testimonies came from Anchorage Digital CEO Nathan McCauley, who described the issue as constant background noise, emphasizing that nearly every crypto company has faced difficulties accessing banking services. These testimonies highlight a systemic issue that has shaped the relationship between banks and the crypto sector for years.

This shift in regulatory scrutiny is particularly relevant given the lawsuits filed by Coinbase against the SEC and FDIC, reinforcing the message that crypto industry leaders are no longer willing to accept regulatory overreach without a fight.

The FDIC’s revised stance is expected to empower traditional banks to engage more actively with the digital economy while maintaining key security and risk management standards. Travis Hill’s approach could act as a catalyst for closer collaboration between the traditional financial sector and the crypto industry. This shift presents new opportunities for banks, many of which have previously faced regulatory uncertainty and pressure when dealing with digital assets.

As a result, the FDIC is on the verge of significant changes that could shape the future of digital assets in the U.S.. The market is eagerly anticipating the regulator’s next steps, as its new policies have the potential to reshape the financial landscape, creating a more innovation-friendly and cooperative environment between banks and crypto firms.